December 05, 2014

Renovation of Chapman Arms in Cambridge Completed

First development to have affordability preserved under Chapter 40T

By Tom FarmerCorporate Communications, MassHousing

CAMBRIDGE - Renovations to the historic Chapman Arms in Harvard Square have been completed and the affordability of 25 apartments there has been preserved in perpetuity as a result of the first use of the state's Chapter 40T law.

Chapter 40T was passed in 2009 to prevent affordable housing from converting to market rates once property owners paid off mortgages with affordability restrictions or opted out of federally subsidized Section 8 rental subsidy contracts.

With the employment of Chapter 40T, the non-profit Homeowners Rehab, Inc., (HRI) of Cambridge, was able to purchase the 50-unit building and preserve the 25 affordable apartments there. MassHousing provided $1 million for the project through the Affordable Housing Trust Fund.

"We are all delighted to be here taking part in your success story because it is your success story," MassHousing Executive Director Tom Gleason told Chapman Arms residents at a recent event to celebrate the project's completion. "You were involved in the first use of Chapter 40T and that's a very big thing. This proved to be a very well-crafted piece of legislation and you brought it to life."

When the former owner sought to sell Chapman Arms in 2011, monitoring and preservation provisions of Chapter 40T were engaged and the state Department of Housing and Community Development (DHCD) designated HRI to purchase the property and preserve the affordability there. Harvard University, which owns the land the Chapman Arms occupies, agreed to ground lease changes which made the project financially feasible, according to HRI Executive Director Peter Daly.

"We were truly pleased to be involved with the first 40T project and even more so to have it result in such a big success," said Daly. "With Chapman Arms and the many preservation projects that have followed, it has been clearly demonstrated that preservation works in our state. Thanks to the resources we received from the state, the City of Cambridge and others, the residents of Chapman have benefited from much needed capital improvements to their homes."

DHCD Undersecretary Aaron Gornstein said Chapter 40T has been very successful in keeping expiring use properties affordable.

"Chapman Arms is an important step toward preserving our supply of affordable housing for citizens in the Commonwealth through innovative regulatory changes, like 40T," said Gornstein. "DHCD was pleased to assist with this development that not only maintains affordable housing opportunities in the vibrant Harvard Square neighborhood, but stimulates local economic activity as well."

HRI worked with Harvard, the City of Cambridge and the existing residents to acquire the building in December 2011. DHCD supported the project with more than $2.2 million in DHCD housing subsidies and federal Low Income Housing Tax Credits to preserve the 25 units of affordable family housing for low-income households.

The Community Economic Development Assistance Corporation (CEDAC), a quasi-public agency affiliated with DHCD, provided financing from the Massachusetts Preservation Loan Fund (MPLF), which was created with funding from the MacArthur Foundation and DHCD to provide early stage financing to non-profit housing developers to help preserve affordability on thousands of units across the Commonwealth. To date, CEDAC has committed almost $20 million in MPLF predevelopment and acquisition loans to 36 projects to preserve more than 3,600 units of affordable housing throughout the state, said Gornstein.

Much of the Commonwealth's stock of affordable housing units built in the 1960s, 1970s and 1980s is facing the elimination of affordability restrictions when owners prepay their federally subsidized mortgages, or opt out of their existing Section 8 rental subsidy contracts. In November 2009, Governor Deval Patrick signed "An Act Preserving Publicly Assisted Affordable Housing," also known as 40T.

This landmark legislation is helping preserve existing privately-owned affordable housing in Massachusetts. The legislation establishes notification provisions for tenants, a right of offer and right of first refusal for DHCD or its designee to purchase publicly assisted housing and modest tenant protections for projects with affordability restrictions that terminate. Chapter 40T has helped to preserve affordability in communities across the state, ensuring that families are able to stay in their homes and neighborhoods, said Gornstein.

Because of Chapter 40T, no project has lost affordability as a result of sale since 2009. With the use of state resources, DHCD has helped to preserve more than 14,000 affordable units that were close to losing that status. DHCD has also processed 40T notices for 240 affordable housing projects with more 25,000 units of housing, said Gornstein.

"This is a great example of a successful public private partnership where residents helped lead the charge," said state Rep. Marjorie Decker. "I am honored to have had the chance to help facilitate this important outcome providing security and affordability to Cambridge residents."

Among the renovations made to the building was historical feature preservation, exterior masonry repairs, new windows, energy efficient upgrades, a new boiler and chiller and 15 kitchens and bathrooms were upgraded.

"We have a vibrant community but we cannot forget it is built on people who live here and on the neighborhoods of this city," said Mayor David Maher. "Affordable housing is the foundation of our city."Chapman Arms was built in 1898 as the Craigie Arms dormitory for Harvard graduate students and was designed by Josephine Wright Chapman, one of the first female architects in the United States.

During World War I, the building was taken over for housing by the U.S. Naval Radio School. Harvard sold the building in 1923 for use as private apartments. In the 1970s Peter Wolf and other members of the J. Geils Band lived there. In 1986 it became a mixed-income apartment community and was placed on the National Register of Historic Places.